KARACHI, April 27: Yields on Pakistan’s benchmark Treasury bills rose by nearly one-and-a-half percentage points at an auction on Wednesday, as the central bank reinforced its aggressive stance against rising inflation. The cut-off yield on six-month T-bills rose to 7.1877 per cent at Wednesday’s auction from 5.6923 per cent at the previous sale on March 30, the State Bank of Pakistan said.

The weighted average annual yield on the paper also rose to 7.0762pc from 5.5070 per cent.

The bank said it sold Rs7.882 billion of the six-month bills after getting bids worth Rs20.01 billion, against a pre-auction target of Rs20 billion.

Primary dealers offered bids from 6.70 per cent to 8.26 per cent, much higher than the previous cut-off, dealers said.

“After a year of gradual rise, the central bank’s monetary stance is getting aggressive to counter inflation,” said Mohammed Sohail, director research at Jahangir Siddiqui Capital Markets.

“Rates are likely to rise further in coming auctions,” he said.

Official figures show the consumer price index rose 10.25 per cent in the year through March, the highest rate since 1997.

“Since rates are on the rise, banks are intentionally holding funds to get better returns in coming auctions,” said Sohail.

The central bank would now hold open market operations to mop up the funds, he said.—Reuters